Policy

Cable Operators Divided Over Carriage Rules

9/03/2012 12:01 AM Eastern

WASHINGTON — The Federal Communications Commission
has gotten an earful in the past couple of weeks over its consideration
of whether to extend cable program-access rules for another
five years — a matter it must decide by October.

And while the Democrat-led FCC is likely to extend those
rules, a federal appeals court
could get the last word.

The program-access rules
require that programming
services owned by cable operators
be made available to satellite
and wired competitors.
Along with the program-carriage
rules, they are Cable Act of 1992-era governors on what
was then essentially the only multichannel-TV game in town.

Major cable operators, represented by the National Cable
& Telecommunications Association, argue that the game has
changed — thanks to the proliferation of competing satellite-
TV providers, telcos and cable overbuilders — and the programcarriage
rules need to be gone.

But the American Cable Association, a trade group of smaller,
independent cable systems that often seek access to unaffiliated
programming, has been strongly defending the rules, and
asked the FCC in a recent filing to expand its view of programming
deals.

In a letter to the FCC two weeks ago, broadcasters CBS and
Fox said that rather than a “modest” broadening of those comparables,
it would make every programming contract a potential
target for FCC discovery.

The ACA suggests such a move would be an overreaction.

“The programmers have expressed concern that ACA’s proposal
will permit operators to file program-access complaints so that
they can engage in ‘fishing expeditions’ by seeking contracts of
unaffiliated programmers and other MVPDs through document
discovery,” ACA president and CEO Matt Polka told Multichannel
News
. “ACA never asked the FCC to expand the scope of its program
access discovery rules to cover third-party contracts, and
expects the FCC to continue to limit the ability of parties to request
documents to those that are both relevant and under the
control of one of the parties to the dispute.”

The FCC voted in 2007 to extend the rules for another five
years; the deadline for renewal is coming up in October. Without
that renewal, the rules would sunset per congressional directive.

In 2010, the U.S. Court of Appeals for the D.C. Circuit denied
a challenge to the rules by MSO Cablevision Systems, The court
said that the FCC had not been arbitrary and capricious in renewing
them, but it also said that by 2012, it might be time for
the ban on exclusive contracts to end.

That is certainly the NCTA’s take on the subject. In meetings
two weeks ago with FCC Media Bureau staffers, attorneys for the
trade group made it clear they thought the prohibitions on exclusive
contracts between cable-owned networks and operators
should be allowed to sunset.

The NCTA said the appeals court had made it clear it did not
think Congress had meant for the rules to last “for as long as
there was some hypothetical risk of anticompetitive conduct.”

The appeals court essentially overruled the FCC two weeks
ago when it stayed enforcement of a program-access complaint
fi led by Tennis Channel as that court reviews that decision. (See
“More Tennis Channel, Anyone?,” Aug. 27, 2012.)

If the FCC extends the program-access rules, given the court’s
signal in the Cablevision case, the regime’s cable-operator opponents
could sue over the decision. An NCTA spokesperson said
it’s too early to make that call.

TAKEAWAY

The FCC has until October to
decide whether to extend rules
barring cable companies from
withholding networks they
own from pay TV competitors
for five years.

September